Global Dividends Hit a Record High That Was Delayed by the Pandemic

Microsoft paid out $4.6 billion in dividends during the second quarter, helping the U.S. notch a record high.


David Paul Morris/Bloomberg

Global dividends hit a record in the second quarter, as pandemic-pressured and -paused payouts rebounded.

Second-quarter dividend payouts rose 11.3% globally to $545 billion, an all-time high, according to the latest version of the Janus Henderson Global Dividend Index. The asset manager’s quarterly index tracks dividends paid by 1,200 companies around the world.

Dividends paid by U.S. companies in the second quarter also set a quarterly record of $144.4 billion, surpassing a record set in the prior quarter.

U.S. firms, however, trailed other regions like Europe and the United Kingdom in terms of overall dividend growth. Companies in those regions and elsewhere continued to play catch-up from the early days of the pandemic when many firms had to cut or suspend their payouts.

That trend has mostly run its course. “Many of the easy gains have now been made as the post-Covid-19 catch-up is almost complete,” Ben Lofthouse, head of global equity income at Janus Henderson Investors, observed in the latest installment of the dividend survey.

Still, even though global dividends set a quarterly record, there’s some caution about payout growth next year owing to concerns about a recession and, particularly in Europe, the lingering conflict in the Ukraine. “Dividends are a little bit of a laggard,” Matthew Peron, director of research at Janus Henderson, tells Barron’s.

Looking ahead to 2023, Peron adds that he expects dividend increases “to be more muted,” especially if there’s a mild recession.

Second-quarter European dividends, excluding the U.K., rose 28.7% from a year earlier in local currency. In the U.K., there was a 29.3% boost; it was 22.5% in emerging markets, with China up 15.4% in local currency; 14.7% in Japan; and 16.8% in Asia excluding Japan. U.S. companies increased their dividends by 8.3%, excluding adjustments for things like special dividend payouts.

All of those figures are in local currencies. But most of those increases were diminished when translated into U.S. dollars, among other adjustments. The greenback has strengthened considerably this year, creating a headwind for many other currencies.

Although U.S. companies trailed those in other regions in terms of the overall rate of underlying dividend increases, the good news for the most part was they didn’t have to dig out of holes created by suspensions or cuts. Early in the pandemic, for example, many large U.S. banks halted their stock buybacks but continued to pay dividends, providing some stability to stockholders.

In the U.S., financial firms and energy companies helped dividends rise overall, Peron says.

In the second quarter,



Morgan Stanley

(ticker: MS) paid a dividend of 70 cents a share, compared with 35 cents a year earlier.



Wells Fargo

(WFC) paid a second-quarter dividend of 25 cents a share, more than double the 10 cents it disbursed a year earlier.

Among the largest U.S. dividend payers in the second quarter were



Microsoft

(MSFT) at $4.6 billion,



Apple

(AAPL) at $3.8 billion, and



Exxon Mobil

(XOM) at about $3.7 billion.

As a result of the second quarter’s strong showing, Janus Henderson tweaked its dividend forecast upward for the entire year. It’s now calling for global dividends to total $1.56 trillion, a small increase from its previous forecast. That would be a 5.8% increase from 2021 levels.

Write to Lawrence C. Strauss at lawrence.strauss@barrons.com

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